Have $100K to Spend on New Customer Acquisition? Where Are You Spending It?
I like this question. I also like the related question, “If you had to reduce your marketing spend by $100K, where would you cut?”
To answer either of these questions it’s necessary to have a good understanding of the incremental return on investment (ROI) on each of your marketing activities. I’m always surprised how often that starts with “I think … ” It makes me worry and, as a consultant, probe deeper to see what’s really known vs. what’s just “felt.”
The sad reality is that most B-to-B direct marketers today aren’t working from hard facts in this area. They’re operating from vague experience and gut feel. I’ve seldom seen a spreadsheet produced in response to this question that ranks all marketing investments on the basis of cost, immediate sales, acquisition and near-term value, like a one-, two- or three-year customer value. So I continue to probe. If you spend another $100K on outbound telesales programs, what would you get? How about pay per click? Search engine optimization? Investing in better site functionality? Mailing more prospect catalogs? One by one, I go through the comapny’s list of marketing activities trying to nail down the ROI on the last $100K spent or an estimate of the ROI on the next $100K spent. I’d be happy to see an analysis of short-term ROI, spend X get Y within three or six months. But alas, even that is elusive.
Now before you rush off and say something like, “We have that … ,” take some time and really objectively ask yourself, “Do I do a good job in this multichannel, integrated performance evaluation area … really?” Then I’d recommend you jettison qualitative statements such as, “We do really well in that area,” and commit yourself to hard numbers on a spreadsheet. Rank the various returns of all your multichannel activities. It’s a cleansing exercise. I suspect you’ll find that you have a bias in your allocation that reflects your legacy business. If you started as a cataloger, you’ll probably find you’re predisposed to mailing catalogs. It is, after all, what you know best. If you started as a telephone sales company, you probably overspend there, and so on.